EUR / USD
EUR/USD demonstrated technical resilience amid macroeconomic divergence between the two regions. The pair has recovered modestly to 1.181 after finding support near 1.177, with price action now sitting above the 20-day moving average at 1.1780 and comfortably above the 50-day and 100-day SMAs clustered around 1.17.
Real interest rate differential has provided limited support for the greenback as Treasury yields have compressed relative to expectations, with the 10-year yield at 4.21%, offering diminished incentive for dollar accumulation. Structural factors increasingly favour medium-term euro appreciation despite near-term headwinds. U.S. fiscal sustainability concerns have intensified with public debt exceeding 123% of GDP and deficits projected at 5.5% for 2026, while European debt levels show greater consolidation momentum.
A sustained hold above the 1.18 support confluence could fuel a push toward resistance at 1.186, potentially reopening the path to 1.20 if broader dollar weakness resumes amid ongoing trade policy uncertainty and diminishing confidence in traditional dollar hegemony.
USD / JPY
USD/JPY currently trades at 157.10, positioned within a compressed range that reflects the market's uncertainty amid significant macroeconomic crosscurrents. Prime Minister Takaichi's commanding electoral victory on February 8 has fundamentally altered Japan's fiscal trajectory, with the Liberal Democratic Party's supermajority enabling aggressive spending measures that have triggered market repricing of yen depreciation expectations. 10-year JGB yields surged from 1.659% in October to 2.23% in February as investors incorporated fiscal expansion premia, directly contributing to yen weakness.
Monetary policy divergence remains the paramount driver for USD/JPY, with Federal Reserve expectations increasingly favouring rate cuts beginning mid-2026, which would narrow US-Japan interest rate differentials and support yen appreciation later on in the year. Japanese wage dynamics showing forecast 3% year-on-year growth could validate BoJ hawkish projections, though recent household spending weakness suggests consumption remains fragile.
From a technical perspective, the pair sits above key support levels including the 50-day and 20-day MA at 156.50, with resistance at 158 and the monthly high near 159. Government authorities have signalled potential intervention thresholds around 160 yen per dollar, constraining upside movement despite bullish short-term fiscal impulses and creating elevated medium-term volatility risk.
GBP / USD
GBP/USD rallied, recovering approximately 0.5% from lows near 1.352 to currently trade around 1.360, positioning itself above key technical support levels including the 200-day moving average at 1.3430 and the 50-day moving average at 1.3485. The pair's bullish bias appears supported by real interest rate differentials that currently favour the pound, though this advantage remains vulnerable to rapid reversal should inflation surprises emerge or Federal Reserve policy expectations shift unexpectedly.
Technical indicators present a mixed but cautiously constructive picture, with price action consolidating above all the moving averages, while the neutral RSI reading of 52 suggests room for movement in either direction.
Policy uncertainty surrounding the Federal Reserve, including ambiguity created by the Kevin Warsh nomination and Treasury Secretary Bessent's cautious signals, suggests dollar strength may lack sustainable fundamental support. Upcoming macroeconomic data releases, particularly employment and inflation figures, will prove decisive in determining whether GBP/USD can challenge resistance at 1.374 and retest monthly highs near 1.385, or whether a breakdown below the 1.35-1.36 support cluster materialises.
